Newspapers: The Times, Independent, FT, Telegraph, Guardian, Mail, Express, Herald 210815

The Times

Co-op Bank faces sale as losses top £200 million: The Co-op Bank is heading towards a trade sale with plans for a stock market listing becoming increasingly unlikely as the struggling lender continues to be plagued by problems two years on from its £1.5 billion bailout.

China jitters send shares tumbling across world: Britain’s biggest listed companies suffered a painful fall as shares tumbled to within one point of their lowest level this year and the Dow Jones industrial average tumbled more than 300 points.

Bitcoin Boss faces rearrest over missing £1.6 million: The Boss of the Mt Gox bitcoin exchange in Tokyo is expected to be rearrested on suspicion of taking £1.65 million from customers’ accounts.

JPMorgan recruits Pentagon’s big gun: The former U.S. Army Chief of staff has been hired by America’s largest bank to advise on international risks and cybersecurity only a week after he retired.

Howard wants fast results in Soma inquiry: Lord Howard of Lympne has urged the Serious Fraud Office to accelerate its investigation into Soma Oil & Gas, the exploration company chaired by the former Conservative leader.

WH Smith sticks to its guns over VAT refunds from airport shops: WH Smith will continue to claim back VAT refunds from passenger purchases at its airport shops.

Long faces at Fatface: Investment for its U.S. debut, and a “horrible second quarter”, have taken their toll on the bottom line at FatFace.

Spotify set to access data on users’ smartphones: In a tweak to its terms and conditions, Spotify has hinted that it may be seeking to reap more value from the huge amount of customer data that it holds.

The Independent

Currency wars in emerging markets hammer global stocks: Developing world devaluations have sent global stock markets into a funk and stoked fears of an intensifying global currency war.

Alexis Tsipras resigns: Greek PM steps down and thrusts nation into yet more political instability: Greek Prime Minister Alexis Tsipras has resigned, paving the way for a new general election and thrusting the beleaguered country into another period of political instability.

Petroceltic forced to deny blog claims: Petroceltic’s bitter row with its rebel shareholder Worldview deepened as the oil and gas explorer denied sensational fraud claims from an anonymous blogger over its trophy Ain Tsila project in Algeria.

RWE prepares to fire Npower Chief Executive Paul Massara: Paul Massara, the Chief Executive of Npower, is reportedly on the verge of being ousted by the Big Six energy company’s German Owners.

Financial Times

Zurich Insurance drafts in Evercore as clock ticks on RSA bid: Zurich Insurance has enlisted additional support in its efforts to buy U.K. rival RSA as the clock ticks on its prospective £5 billion-plus takeover.

Amazon Web Services to open London data support centre: Amazon is targeting the custom of British start-ups by opening a base in London designed to support businesses using its cloud computing services, its first such facility outside the U.S..

Qantas turnround gains altitude with swing to profit: Qantas Airways’ recovery gained altitude as the airline soared back into the black and outlined bullish plans to buy new aircraft, return cash to its shareholders and reduce debt.

U.K. car and engine manufacturing falls: U.K. car and engine manufacturing took a hit last month, as halting demand from emerging markets compounded lower production because of annual summer shutdowns for maintenance.

Bloomberg hits back over politics claims: Bloomberg, the financial data and news empire run by billionaire Michael Bloomberg, played down reports that it was poised to engage in a major restructuring of its Washington and New York operations.

Li & Fung profits fall 20%: Profits at Li & Fung dropped 20% in the first half of the year as the Asian supplier to global retailers such as Marks and Spencer and Walmart continued to suffer because of tough conditions in the U.S. and Europe and the rise of ecommerce.

Lex:

China Guangdong Nuclear Power: volt from the blue: The first of China’s big power producers to announce interim results, $19 billion China Guangdong Nuclear Power, delivered an underwhelming report after the close on Wednesday. The stock dropped more than a tenth on Thursday — down more than half from the June peak and drifting back towards its December listing price. After such a sell off, it may be tempting to step back in. The long-term story looks as bright as it did at the listing. Nuclear power generation capacity in China is set to grow strongly as authorities push for cleaner skies. Yet the risks related to nuclear generation are coming back to the fore. Earlier this year, France’s nuclear safety authority (ASN) said it was investigating a fault in equipment Paris-listed Areva installed in a power plant in Normandy. CGN Power’s stock is the most expensive among the Hong Kong-listed power generators, despite the risks. It trades at 16 times 2016 earnings per share, expected to be flat versus 2014. Peers such as Datang and Longyuan Power trade at seven and 13 times next year’s EPS, respectively, with more growth. Chinese electricity may not be the market’s first choice these days. CGN Power’s premium rating should make it the last choice.

Marketplace lending: maddening: Saliha Madden did not pay her Bank of America credit card bill 10 years ago. As a result, ‘s lofty valuations of marketplace lenders such as Lending Club are in doubt. Go figure. The collection agency, Midland Funding, said the debt was governed by the law of Delaware, which has no interest rate cap. Banks are permitted to rely on federal U.S. law to override conflicting state laws. But a court ruled that Midland did not inherit BofA’s pre-emption right. This partly explains the poor performance of the biggest alternative lender, which went public last year. Lending Club has since fallen 15%, but still trades on an enterprise value of 68 times 2016 earnings before interest, tax, depreciation and amortisation. SoFi, which is less vulnerable because it has state licences, appears to have had no difficulty in its latest funding round that valued the company at $4 billion, the Wall Street Journal reported. The ruling will be useful if it helps puncture the myth that “disrupters” will easily disintermediate the banks: their fates are intertwined. That is not all bad news for alternative lenders. Banks have joined the court battle: they do not want the secondary market for their loans thrown into doubt. Those who believe that marketplace lending will devour enough of banks’ business to justify these valuations have no reason to lose hope.

Valeant and Sprout: neither hot nor bothered: Some are willing to pay up for it; others think it cannot work as promised. No, not Valeant’s business model. The controversy concerns Addyi, a drug just approved by the U.S. authorities to treat low libido in women. A few days after that approval, Valeant has paid $1 billion for the company that owns it, Sprout. Nine zeros, and a health problem that guarantees media attention, make this look like a big deal. It is not. A drug that, while the first of its kind, is modestly effective is being bought for a middling price. But the $1 billion does not imply hopes for a smashing success. Compare the erectile dysfunction drugs Viagra, Cialis and Levitra, whose peak-year sales in 2012 (before the patents on Viagra began to expire) totalled about $4.5 billion. Given the pills’ high profit margins, this implies a lifetime value for that group of drugs of many tens of billions. Valeant will also pay undisclosed royalties to Sprout’s Owners, depending on the drug’s sales. Still, at $350 a month (a price estimate from Sprout), $1 billion suggests expectations that thousands — not millions — of women will take Addyi. Nor does the speed from approval to deal suggest Sprout suitors lining up. What is interesting about the deal is that it marks a change of approach by Valeant, a serial acquirer that prides itself on cutting research and overhead costs. If, as some have argued, Addyi has very limited medical benefits, an expensive marketing campaign — not a Valeant turn-on — will be in order.

Lombard:

Tengeance is theirs: Funds shorting Kaz Minerals have had the wind knocked out of them as sharply as an unlucky player of buzkashi. This is a central Asian form of rugby where players are mounted and a dead goat features as the ball. Shares in Kaz went 14% the other way, even as the London-listed miner announced earnings before nasties had slumped 55% to $88 million in the six months to June 30. The group is a big producer of copper, the price for which has tanked. The company, previously known as Kazakhmys, had guided that gross cash costs would be 7% lower for the full year at 260-280 U.S. cents per pound of red metal. Analysts estimated local overheads, such as staff wages, would be some 11% lower again. The short squeeze felt ephemeral. In time, workers and suppliers will seek higher wages and prices from Kaz Min, since many products they need are priced in relation to dollars. Prospects for copper remain weak.

Brighthouse becalmed: The company, which specialises in “rent-to-own” (or “hire purchase”, as it was called in the days of radiograms and rickets) was tipped to float last year. Further heavy hints of an initial public offering were dropped early this year. But still no intention to float notice has been published. The FCA has taken over regulation of these. Some 50,000 lenders are operating under interim permission, while the watchdog decides whether to authorise them. It is inconsistent to attack lenders such as Brighthouse without spanking banks which will not lend to the poor at all. But that argument did not save payday lenders from penal regulation. Odds on a 2015 float are lengthening.

The Daily Telegraph

Opec unity cracks as disgruntled members call for meeting to stem oil slump: Pressure is building on Saudi Arabia from members within the Organisation of the Petroleum Exporting Countries (Opec) to agree to an emergency meeting to arrest plummeting oil prices.

House prices soar in major U.K. cities – and this is just the beginning: House prices across the U.K.’s largest cities jumped by the highest quarterly level in 11 years as demand for housing continued to outstrip supply, according to property analyst Hometrack.

Pound falls as disappointing retail sales figures weigh on growth hopes: British shoppers are buying more in stores this summer as they enjoy low prices – but overall retail sales disappointed in July.

Valeant to buy maker of first women’s libido drug for $1 billion: Valeant Pharmaceuticals is to pay about $1 billion (£638 million) to buy Sprout Pharmaceuticals, the maker of the first prescription drug designed to boost sexual desire in women.

Phoenix hires WH Smith chair Henry Staunton as it prepares for more deals: Henry Staunton is adding a second FTSE 250 Chairmanship to his workload, after agreeing to replace Sir Howard Davies as the chair of the pensions consolidation business Phoenix Group.

Low oil prices bite as Premier Oil waits to tap Shetland field: Tumbling oil prices and the cost of a new oil field off the Shetland Islands dragged Premier Oil to a $375.2 million loss in the first half of the year.

Kazakhstan currency plunges by record 23% as government relinquishes control of exchange rate: Kazakhstan’s tenge plunged a record 23% after the country relinquished control of its exchange rate, becoming the latest emerging market to abandon efforts to prop up its currency before the U.S. raises interest rates.

World’s biggest smartphone market hits saturation as sales in China fall for first time: Smartphone sales in China, the world’s biggest market, have fallen for the first time as the country’s authorities attempt to restore investor confidence in the rapidly cooling economy.

The Questor Column:

Costain profits from rebuilding Britain: The U.K. needs to modernise its antiquated infrastructure and construction firm Costain said that it is generating steady profits by ploughing through a record order book to modernise Britain. Costain has focused its business on transport, energy and water in the U.K. It has secured work programmes on the controversial high-speed rail link HS2, London’s Crossrail, nuclear projects at Sellafield and the new Hinckley Point endeavour. The construction group has a good track record of delivering its projects. Andrew Wyllie, Chief Executive, said that customers are looking to consolidate their supply chains and work more closely with the construction companies. Under the new contracts, Costain and the client share in both the upside and the downside during the life of the project. “This is why our collaborative approach is important.” Around 90% of Costain’s work is now cost-target based, up from 50% in 2010. It is an impressive performance from Costain and the shares jumped almost 6% higher, bringing gains for the year to 31%. We tipped Costain’s recovery back in March (Buy, 302p, March 3) as we liked the strengthening order book, and the shares have since delivered a more than 20% gain. The shares now trade at a price-earnings (p/e) ratio of 17, which is very high for a low-margin cyclical industry, and yield 3%. We still like the order book and demand for Costain’s services but, after the rapid gains, we downgrade to a hold. Costain at 370p +23½p. Questor says “Hold.”

Sell Glencore as copper tumbles: Glencore Chief Executive Ivan Glasenberg is backing himself in one of the greatest trades of his life, and Questor is concerned he is backing himself and his investors into a corner. The message from Mr Glasenberg at his company’s first-half results was clear. Fundamentally he believes in China and he believes that the long-term demand for commodities mean prices will recover. That was before Glencore listed on the London Stock Exchange in May 2011 at 530p and then acquired mining giant Xstrata a year later. Mr Glasenberg now describes Glencore as “the most diversified commodity producer and marketer” arguing that it is “well positioned to benefit from any improvement in pricing when it finally and inevitably materialises”. First there was the Xstrata deal which was supposed to be a merger of equals until Xstrata Chief Executive Mick Davis and almost his entire team of mining Executives were shown the door soon after the ink had dried. With that in mind the profit performance is slightly academic. A first half loss of $676 million (£431 million) and adjusted first half earnings of $6.46 billion, a 29% fall from the same period last year, are to be expected. Mr Glasenberg can expect some pain as he waits for the copper market to turn. That is where Glencore’s crucial BBB credit rating comes in. It needs this rating to get the loans required to fund its positions; without it, things would quickly unravel. Mr Glasenberg shows no hint of backing down from his trade in these results. If he’s right and prices recover he’ll pull off his greatest trade. Questor thinks investors should stay well away from the shares as there are huge risks if prices fall further. Glencore at 158.95p-17.15p. Questor says “Sell.”

The Guardian

FTSE 100 falls into correction territory amid global economy fears: Britain’s leading share index dived for an eighth consecutive day on Thursday, as tumbling oil prices and anxiety over a slowing economy in China sent the FTSE 100 officially into correction territory – a fall of 10% from its recent peak.

Twitter shares crash to below initial market price: Twitter shares have crashed below the price they originally sold for as investors grow increasingly concerned that the service won’t be be able to become a mainstream platform like Facebook.

Government contract bids will have to show commitment to apprenticeships: Companies bidding for government contracts worth over £10 million will be expected to demonstrate a clear commitment to apprenticeships, David Cameron has announced, as part of a government push to create three million more apprenticeship places this parliament.

Daily Mail

Adult colouring book craze and 50 Shades of Grey sequel whip up hopes at WH Smith: A current craze for adult colouring books and strong sales of the 50 Shades of Grey follow-up novel Grey helped WH Smith lift profit forecasts for the full year.

Polish vodka price war forces Stock Spirits to issue profits warning: A vodka price war in Poland caused Stock Spirits to issue a profit warning, but shares rallied 10%, after an early dip.

Chelsea’s blues are a boon for Gala Coral as it gears up for Ladbrokes merger: Gaming group Gala Coral has enjoyed a ‘strong start’ to the Premiership football season as its bookmaking arm gears up to merge with rival Ladbrokes.

U.K. retail sales volumes rise by 0.1% in July but shoppers still didn’t spend as much as expected last month: Official retail sales numbers edged up slightly in July as U.K. shoppers took advantage of high street promotions to splash out on electrical appliances and furniture, but the rise was less than expected.

BT strikes news two-year deal with sports producer Sunset+Vine to broadcast its football and rugby games: BT has struck a two-year deal with the TV company behind the London 2012 Paralympics coverage to show its sports matches.

U.K. set to win £1billion from Rugby World Cup bounce, as EY study shows potential economic benefits of the tournament: The Rugby World Cup may still be a month away from kick-off but already the potential economic benefits of the tournament have been calculated by experts to be substantial.

Daily Express

Co-op Bank in the red until 2017: Co-operative Bank warned it would remain in the red until at least 2017 after half-year losses nearly tripled as it counted the cost of mismanagement.

L&G commits to renewables: One of Britain’s biggest stock market investors is set to ramp up spending on renewable projects to help secure the U.K.’s energy security and independence.

The Scottish Herald

Turnover and profits up at Burness Paull: Law firm Burness Paull has seen its turnover rise above £50 million for the first time while also booking an increase in profits.

FanDuel acquires U.S. sports analytics firm: Fanduel, the fantasy sports specialist, has sealed its second acquisition in a month after snapping up numberFire, a U.S. sports analytics platform.

Higgs Fund launches with £625,000 backing: A new fund named after the Nobel Prize winning physicist Professor Peter Higgs aims to give a boost to Scottish companies in the science, engineering and technology sectors.

BrewDog Boss takes slice of salami maker Serious Pig: Brewdog co-Founder James Watt has taken a stake in artisan salami maker Serious Pig.

Trinity reveals talks with suitors: Shares in Trinity Exploration and Production have dropped by more than 14% after it revealed talks have taken place with potential suitors.

Webhelp U.K. adding to Glasgow workforce: Webhelp U.K. is planning to add a further 50 people in Glasgow.

Property trust has warchest to invest: U.K. Commercial Property Trust, now run by Standard Life Investments following last year’s takeover of Glasgow-based Ignis, has a £130 million warchest for investment.

The Scotsman

More pain for Co-operative Bank as losses hit £204 million: Embattled Co-operative Bank saw losses almost treble in the first half of the year as the self-styled “ethical bank” warned that its financial recovery would take at least another two years.

Glenmorangie profit rise despite hit from China: Tough trading conditions in China have failed to prevent whisky distiller Glenmorangie from serving up an 8% rise in annual profits.

Glasgow’s Sauchiehall Street Waterstones on market: Scotland’s largest bookshop has been put up for sale, with Owner Aviva Investors seeking offers of more than £4.25 million for the Waterstones branch in Glasgow.

McClure Naismith tight-lipped on rescue reports: Law firm McClure Naismith, which is more than seven months late in filing its annual accounts, has refused to comment on speculation it is poised to appoint administrators in the hope of securing a “pre-pack” rescue deal.

Fall in car production blamed on industry ‘pause’: Car production fell last month, but the industry is still in a strong position, a trade body has claimed.

City A.M.

HP sales slip as consumers hold off buying PCs: Computing giant Hewlett-Packard (HP) reported its fourth straight quarter of lower revenues, pointing to a strong dollar, weak personal computer sales and lower demand from corporates for its services.

Manufacturers and home sales buoy U.S. outlook: Manufacturers in the Phila­del­phia region are growing strongly this month, according to survey figures released, easing fears over the sector’s health.

Strong first half for Rabobank as Dutch economy rebounds: Dutch lender Rabobank booked 41% higher net profit in the first half of 2015, lifted by a rebounding Dutch economy and a steep fall in provisions for bad loans, it said.

Meggitt strikes $40 million U.S. jets fuel cell deal: Meggittt has won a $40 million (£25.5 million) contract to supply fuel cells to U.S. combat jets.

NHS reforms keeps Primary Health Properties in shape as earnings jump: Primary Health Properties (PHP) posted a jump in profits in the first half, as government plans to ease pressure on A&E departments by shifting more services to local GP practices helped to boost demand.

Europe grocery sales rise for fifth quarter but U.K. lags behind: The Volume of everyday products bought by consumers across Europe has increased year-on-year for the fifth consecutive quarter, with the U.K. standing out as the only one of the big five western European countries to post a decline.

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